2018 Q2 Dealer profitability

15 August 2018

Total Industry 

Dealer profitability, as measured by net profit as a percentage of sales (NP%S), for the second quarter of 2018 was 1.5%. This left the first half of the year at 1.5%, down by 0.7% on the same period in 2017. Despite an increase in gross profit from Fixed Operations, declining Vehicle revenues and falling F&I income meant the average dealer saw a net drop in their profit in the first half of the year.

State-by-State

New South Wales/Australian Capital Territory

The average NSW/ACT dealer NP%S was 1.2% for the period Apr - Jun 2018 which is -0.9% down from the same period in 2017. Falls in New Vehicle gross and F&I income, coupled with increases in Overheads contributed to this decline.

Queensland

The average NP%S in Queensland was 2.3% for Q2 2018, down from 2.9% in Q2 2017. Despite finding savings in their expense base, Queensland dealers were impacted by declines in New Vehicle profitability, F&I and Bonus Income.

South Australia/Northern Territory

The state group of SA/NT returned NP%S of 1.9% for the second quarter of 2018, however this was down -0.7% from the same period in 2017. In addition to seeing declines in F&I and increased expenses, SA/NT dealers also saw a fall in gross profit as their Fixed Operations performance softened.

Victoria/Tasmania

After seeing NP%S of 1.6% in Q1 2018, dealers in Victoria & Tasmania returned NP%S of 1.3% in Q2 2018 - this was -0.3% down on Q2 last year. These dealers saw a more modest fall in F&I income than dealers in other states, but they were still impacted by declines in new and used vehicle profitability.

Western Australia

Dealers in Western Australia experienced the largest fall in NP%S in Q2 2018 - moving from 2.5% in 2017 to 0.8% in 2018. Despite finding savings in their cost base, WA dealers were unable to offset declining revenues and gross profit from their vehicle and F&I operations.


Segments

The dealers in the Volume segment had the highest profitability for Q2 2018 (1.6%), however this was down -1.1% on Q1 2017. The average Prestige segment dealer saw NP%S fall from 2.5% in Q2 2017 to 1.5% in Q1 2018. The dealers in the Luxury segment continue to find the market difficult, with NP%S of 1.4% in Q2 2018 compared to 1.8% in Q2 2017.

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